September 13, 2011

Poverty Up, Incomes Down - And What to Do About It

The Census Bureau just released its annual report on income, poverty, and health insurance in the United States. The news is as about as dreary as you'd expect. The official poverty rate is now 15.1 percent, which is a fancy way of saying that one in six Americans are extremely poor. That's the third year in a row the proportion of Americans has risen. If you want to find a year when the poverty rate was significantly higher, you have to go all the way back to the early 1960s, before enactment of the Great Society.

As always, the report has a ton of data. I'm going to hold off saying much more until everybody (myself included) has had a chance to digest it. But one page -- actually, one graph -- in the report really stood out as I was flipping through it initially. It's the graph on median household income, which you can see above. (Larger version here.) Median income has been declining sharply for the last few years, as you would expect. But even before that decline, median income was more or less stagnant. The downturn is causing a lot of pain, obviously. But this economy had problems even before the financial crisis. (My new colleague, Timothy Noah, knows a thing or two about this.)

Among the few pieces of relatively good news: The proportion of Americans without health insurance held steady. That's largely the result of higher Medicaid enrollment, compensating for declining employer coverage. Yes, without government-run health care -- or, at least, government-run health insurance -- even more people wouldn't be able to pay their medical bills.

In addition, Americans between the ages of 19 and 25 are significantly more likely to have insurance than they were a year ago, defying the overall trend. According to Robert Greenstein of the Center on Budget and Policy Priorities, that likely reflects the impact of the Affordable Care Act, which allows young adults to stay on their parents' policies until they are 26. Yes, it's a sign that Obamacare is working.

Of course, government could be doing a lot more. It could send more money to the states, so that they could expand Medicaid further and, by the way, stop laying off so many public workers. It could create still more jobs with investments in public works and well-targeted tax breaks -- say, the kinds that President Obama proposed last week. At least, that's the conclusion of top experts like Isabel Sawhill, co-director of the Center on Children and Families at Brookings. Via e-mail, she says:

In all the debate over the President’s job proposal, there has been too little emphasis on what it might mean for lower-income families. I estimate that his bill would keep roughly 3 million people out of poverty in 2012 – about half because of greater employment and about half because of the extension of unemployment benefits and lower payroll taxes.

But Republicans and their allies have resisted such measures, allowing a bad situation to get worse for everybody except the very wealthy. As the great philosopher Bruce Springsteen notes, it's high times on Wall Street and hard times on Main Street:

Update: I added the quote from Isabell Sawhill and statement from Bob Greenstein, while changing the Springsteen video. Also, Matthew Yglesias points out an important caveat: This particular set of Census numbers don't include the value of programs like food stamps, which help offset the effects of poverty. A separate estimate, including those and other relevant factors, will come out in a few months.